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Mar 31, 2023
Frontdoor Q1 2023 Earnings Report
Frontdoor's first quarter performance was marked by a 4% revenue increase, improved gross profit margin, and strategic initiatives, including the launch of a new mobile app, driving enhanced earnings and a focus on shareholder returns.
Key Takeaways
Frontdoor reported a 4% increase in revenue to $367 million for Q1 2023. Gross profit margin improved to 46%, and net income rose to $22 million. The company launched a new mobile app and expects to repurchase approximately $80 million in stock in 2023.
Revenue increased by 4% to $367 million, driven by a 10% increase from price, partially offset by a 5% decline from lower volume.
Gross profit margin increased 540 basis points to 46% due to higher realized price, fewer service requests, and moderated inflationary cost pressures.
Net income increased by $20 million to $22 million.
Adjusted EBITDA increased by $29 million to $54 million.
Frontdoor
Frontdoor
Frontdoor Revenue by Segment
Revenue by Segment
Renewals Revenue
CapyFin.comOther Revenue
CapyFin.com Forward Guidance
Frontdoor provided full-year 2023 revenue guidance of $1.70 billion to $1.74 billion and Adjusted EBITDA guidance of $220 million to $240 million.
Positive Outlook
- Revenue growth in the renewals channel is expected to be approximately 10%.
- Gross profit margin is expected to be between 43.5% and 46.0% due to a moderation of inflation.
- Expects to repurchase approximately $80 million in stock in 2023
- Second-quarter 2023 revenue is expected to be $505 million to $520 million, a 5% increase over the prior year period
- Second-quarter 2023 Adjusted EBITDA is expected to be $80 million to $90 million, a 10% increase over the prior year period
Challenges Ahead
- Revenue decline in the direct-to-consumer channel is expected to be in the low double digits.
- Revenue decline in the real estate channel is expected to be nearly 20%.
- The number of home service plans is expected to decline in the mid to upper single digits.
- SG&A is projected to be $570 million to $595 million due to additional investments in the American Home Shield brand.
- Capital expenditures are expected to be approximately $35 to $45 million, primarily consisting of technology investments.
Revenue & Expenses
Visualization of income flow from segment revenue to net income